USD/CHF surrenders modest intraday gains, 0.9250 area continues to cap the upside

• USD/CHF struggled to preserve modest intraday gains to the 0.9250 strong resistance zone.
• Retreating US bond yields kept the USD bulls on the defensive and capped gains for the pair.
• The Fed’s hawkish outlook should act as a tailwind for the USD and limit any meaningful slide.

The USD/CHF pair surrendered modest intraday gains and dropped to the lower end of its daily trading range, around the 0.9230 region during the first half of the European session

The pair gained some positive traction during the early part of the trading on Wednesday, albeit continued with its struggle to make it through the 0.9250 resistance zone. A fresh leg down in the US Treasury bond yields kept the US dollar bulls on the defensive and capped the early uptick for the USD/CHF pair, rather prompted some intraday selling.

That said, a combination of supporting factors should lend some support and help limit any deeper losses, at least for now. The Fed's hawkish outlook, indicating at least three rate hikes next year, should lend some support to the greenback. Apart from this, fading safe-haven demand should assist the USD/CHF pair to attract some dip-buying at lower levels.

Investors turned optimistic after reports suggested that the current vaccines may be more effective than first thought in fighting the Omicron variant. The optimism should act as a headwind for the safe-haven Swiss franc and extend some support to the USD/CHF pair. This warrants caution before placing bearish bets and positioning for any meaningful slide.

Wednesday's US economic docket highlights the release of the final Q3 GDP print and the Conference Board's Consumer Confidence Index. This, along with the US bond yields, would influence the USD and provide some impetus to the USD/CHF pair. Traders will further take cues from the broader market risk sentiment to grab some short-term opportunities.

Technical levels to watch